Finance Minister Simplex Chithyola has his work cut out for him; he must reduce government’s borrowing appetite and reign in expenditure controls if the ambitious economic growth targets of 3.2 percent to 4.8 percent are to be achieved by 2025.
This is the advice from the country’s second largest bank Standard Bank Plc, listed on the Malawi Stock Exchange (MSE).
In a statement officially responding to the Finance Minister’s draft 2024/25 budget statement, the bank’s Chief Executive Phillip Madinga said adherence to austerity measures and reducing public debt levels hold the keys to achieving the ambitious growth targets as set out in the government’s latest fiscal plan.
“Success of implementation of this budget, and Malawi’s economic recovery, will hinge on the boldness, courage and commitment by all stakeholders—thus private sector supporting initiatives that drive production and export generation, and on the government side, adherence to its austerity measures, reducing public debt levels and effective fiscal management and discipline,” he said.
He also pointed out that the public debt interest line—which has increased by three percent of the total expenditure—must be closely monitored to ensure it remains within budget.
Madinga noted that on the positive side, the 2024/25 budget demonstrates government’s commitment to contain public debt growth as overall stock of MWK1.4 trillion represents a reduction by 14 percent and seven percent as a proportion of revenue and expenditure lines, respectively.
“The overall public debt growth at K1.4tn, as a share of total revenues and total expenditure, has reduced by 14% and 7%, respectively, year on year. With the positive outlook on the macros, public debt growth is expected to be contained…This will be a significant step towards achieving debt sustainability,” he said.
The Standard Bank chief said the 2024/25 budget also addresses the need to boost foreign currency supply by proposing export strategies through Mega farms, labour export, mining, tourism, and enhancement of diaspora remittances.
Madinga added that based on the enhancement of revenue collection processes, anticipated donor inflow opportunities, rationalization of expenditures and additional focus on production sector, the 2024/25 budget gives hope to a better Malawi on the road to achieving the 2063 vision.